Thomas Piketty was onto something. The French economist, who published his 2.5m-selling treatise on global inequality in 2014, predicted that the top earners in the 21st century wouldn't be the senior bankers working 70 hour weeks, but the rentiers living on income derived from their assets. A new study by the LSE's International Inequalities Institute, covered by the Guardian, suggests he could not have been more right.
The LSE spoke to an unnamed City of London banker earning a "few hundred thousand pounds" who said his level of income," does not feel that great." The reason is simple: when he looks around him he can see people with a lot more money doing a lot less work.
Those people are the parents of classmates at his children's school, nine or ten of whom have assets in excess of £100m ($129m). "That to me feels wealthy, " said the banker. It doesn't help that these 'genuinely wealthy' people also have the most valuable commodity of all: time. "None of them really work," observes the banker, or if they do they just have a little vanity hedge fund and work "on their own terms." The upshot is that while he's slaving away for an employer and rarely seeing his children, the £100m+ brigade get to take their children to school and participate in their lives. As Thorsten Veblen noted over 100 years ago in his Theory of the Leisure Class, leisure has kudos and hard work does not. Richness should be defined in terms of assets rather than income, the banker concludes.
Separately, a Credit Suisse trader has demonstrated the art of escaping the Swiss bank. Bloomberg reports that Vivek Kappor, a trader in complex equity products has started a New Jersey hedge fund called Volaris Capital Management with around $1.6bn of assets he oversaw at Credit Suisse. Kapoor's exit was made possible by Credit Suisse's decision to close its private bank, which provided him with all his clients.
J.P. Morgan will shift 500 to 1,000 jobs out of London soon as the preliminary stage of its Brexit plan. (WSJ)
Standard Chartered's 6% return on equity is an embarrassing sign that the bank needs to step up the risk. (Gadfly)
Standard Chartered will be moving some staff from London to Frankfurt because of Brexit. This won't be a problem: the bank already has an office and 'several staff' in Frankfurt. (Financial Times)
The big risk to London's status as a financial center is that banks won't want to fragment their clearing, particularly in swap derivatives. (Gadfly)
Irrespective of your earning power, if you're not a British citizen Britain's Conservative party would like to stop you bringing your spouse to live with you in the UK unless he or she speaks English. (Guardian)
Traders at BNP Paribas did better than traders at other European banks last quarter. (Reuters)
BNP Paribas said it's in a position to grow its trading business. (Bloomberg)
Credit Suisse hired a San Francisco-based TMT banker from Bank of America. (Reuters)
Avoid hedge fund careers if your personality is that of a neurotic tortoise. (Wharton)
Person wanted to walk energetic tortoise. (NY Post)